Supply and demand revisited

Controversy and excitement make
headlines. Looking at the December 9 USDA report for the grain markets, nothing
profound or unexpected happened. The market slid lower as the tone of the
report was negative, however, nothing “new” was discovered or disclosed that
the market hadn’t been anticipating for the last two weeks.

Even though the report may have been
underwhelming for journalists, the information is useful if you are a farmer
whose livelihood depends on smart decisions. Below is a quick recap of the report:

CORN

The USDA's end of year stockpiles
estimate for the U.S. is now pegged at 848 million bushels, up slightly from
its November forecast of 843 million bushels, and above the average analyst
guess of 838 million. The USDA cut its food, seed and industrial demand
projection by 5 million bushels, to 4.6 billion. The USDA also raised its world
ending stocks projection to 127.2 million metric tons from a prior forecast of
121.6 million. USDA estimates China end of year supplies at 56.97 million
metric tons, up from 51.72 million estimated last month. Overall, corn prices
are still in a sideways trend. It a good sign that corn did not plunge through
technical support levels, nor were any sell stops triggered below technical
support levels.

SOYBEANS

The USDA raised its estimate of U.S.
2011-12 soybean ending stocks to 230 million bushels, up from 195 million in
November and above the average trade estimate of 214 million. The stocks
increase came from reductions in USDA's forecasts of U.S. 2011-12 soybean
exports and domestic crushing. The USDA also raised the 2011-12 global soybean
carryout to 64.54 million tons, from 63.56 million in November.